Question:

Kishore and Ranjan were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1stApril, 2024, their Balance Sheet was as follows :
Balance Sheet of Kishore and Ranjan as at 1stApril, 2024
LiabilitiesAmount (₹)AssetsAmount (₹)
Sundry Creditors1,80,000 Cash in hand30,000
General Reserve20,000Debtors1,20,000
Capitals:Kishore – 6,00,000Stock1,50,000
Ranjan – 4,00,000Furniture1,00,000
  Land and Building8,00,000
Total12,00,000Total12,00,000
On the above date, Singh was admitted as a new partner on the following terms :
(i) Singh will bring \(₹1,50,000\) as his capital and \(₹50,000\) as his share of goodwill premium.
(ii) The value of stock will be reduced by 10% and Land and Building will be appreciated by 10%.
(iii) Furniture will be revalued at \(₹90,000\).
(iv) A provision for doubtful debts will be created on sundry debtors at 5%.
(v) Investments worth \(₹10,000\) not mentioned in the Balance Sheet will be taken into account.
(vi) A creditor of \(₹1,000\) is not likely to claim his money and is to be written off.
Pass necessary journal entries for the above transactions in the books of the firm on Singh's admission.

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Journal entries on admission include: \begin{itemize} \item Bringing capital and goodwill by new partner. \item Adjustments in revaluation and reserves. \item Distribution of goodwill and revaluation profit/loss in old ratio. \end{itemize}
Updated On: Feb 21, 2026
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Solution and Explanation

Journal Entries in the books of the firm:

Particulars L.F.Amount (₹)
Cash A/c Dr.
    To Singh's Capital A/c
    To Premium for Goodwill A/c
(Being capital and goodwill premium brought in by Singh)		 2,00,000
1,50,000
50,000
Premium for Goodwill A/c Dr.
    To Kishore's Capital A/c
    To Ranjan's Capital A/c
(Being goodwill premium distributed in sacrificing ratio 3:2)		 50,000
30,000
20,000
Revaluation A/c Dr.
    To Stock A/c
    To Furniture A/c
    To Provision for Doubtful Debts A/c
    To Creditors A/c
(Being decrease in assets and provision created)		 38,000
15,000
10,000
6,000
1,000
Land and Building A/c Dr.
Investments A/c Dr.
    To Revaluation A/c
(Being increase in assets recorded)		 80,000
10,000
90,000
Revaluation A/c Dr.
    To Kishore’s Capital A/c
    To Ranjan’s Capital A/c
(Being profit on revaluation distributed in 3:2)		 52,000
31,200
20,800
General Reserve A/c Dr.
    To Kishore’s Capital A/c
    To Ranjan’s Capital A/c
(Being general reserve distributed in old ratio)		 20,000
12,000
8,000
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